, 1887-07-14
VIReINIA,s DEBT.
A Plain Statement of the Facts in the
Case.
WALTER WIBERLY.


loVtclu correspondence
WASHINGTON, July 4-Sir Edward
Thornton, formerly British minister to the
United States, and very recently n financial
minister from the British bondholders to the
state of Virginia, has gone home in a rather
bad humor, after poirtedly intimating thai
he would make the state debt of Virginia an
international question. There is only "A bare
possibility that the United States will take
any action regarding the debt of a state, for
getting in debt and paying, or failing to pay,
is one of the few functions on which all politi-
cal parties have agreed to the most extreme
doctrine of states rights; but as the division
of old Virginia during the war put the debt
of that state on a somewhat different footing
from that OF other states, and at least one
prominent statesman advocates national as
sistance to that state, it is well worth our while
to look into the facts. The following figures
are taken from the state auditors books at
Richmond:
Jan. /, 1861, Virginia then including the
present West Virginia. owed S33, 24S, III:
nine years afterward her debt, floating and
bonded, was S45,660,34S And none of this,
strictly speaking. was incurred for war pur-
poses; much of it was merely accumulated
interest and the rest for expenses incurred
after the surrender of Lee and before the re-
turn of prosperity and full revenues. The
original debt was validity contracted in con-
structing valuable improvements, but as there
had been some extravaganza between 1865
and 1870, and as West Virginia had with
drawn with her share of the improvements,
a question arose as to how much the old state
honestly owed. Virginia, therefore, agreed
to assume two-thirds of the debt as it stood
in 1870, and tho funding act of March 80,
1871, into thirty-four year bonds bearing 8
per cent. interest, coupons receivable for all
debts and emands due the state" The
bondholders fastened to refund on this basis.
and nearly two-thirds of the amount assumed
had been funded when, on March Z, 1872, the
Legislature reported the clause making the
coupons legal tender to the state for taxes.
Tho claim was made that payment in coupons
would so far reduce the states cash receipts
rs to close the public schools, and on this
ground the colOred voters unanimously, many
whites with them, supported the policy Of
coupon repeal. The bondholders could neither
sell nor collect OF their coupons for some
years; so on March 2S, 1879, the legislature
passed the "ten-forty act, to the effect that
the matured coupons might be refunded at
half their face, and the other bonds CONSOLE
dated-those taken under the act of March
80, 1871. at reduced rates-into new bonds
bearing 8 per cent. for ten years, 4 per cent
for the next twenty years and 8 per cent. for
ten years, the coupons to be again receivable
for taxes, This is the noted "Riddelberger
act" drawn by the senator of that name.
The bondholders generally refused this offer,
and when some IS, OOO,O 900 had been re-
funded under it, the legislature, in Feb
ruary, 1882, and November, 1884, again
changed the terms, ''scaled down" a
small part of the debt and again pro-
vided for funding the remainder, dding a
stringent clause that those who did not refund
under this act before a certain date should be
without a remedy. The bondholders then
made n test case on the coupons in the
Federal courts, and the supreme court OF the
United States decided, five justices to four,
that officials must receive the coupons for ali
taxes and demands due the state. The four
dissenting judges held that the Federal court
had no jurisdiction, as the Eleventh amend
ment to the constitution forbade it to act in
such cases; so the decision is liable to be over
ruled at any time after n successor is ap-
pointed to the late Justice Woods. And in
this curious, uncertain and unsatisfactory
condition the matter stood when Sir Edward
Thornton arrived. In the meantime. coupons
have matured to the amount of 81, 500, 600
n~early-enough to keep all cash out of tho
treasury for two years or more-but Virgin
ians as yet have not awaited themselves very
largely of this cheap way of paying taxes.
The total OF Vlrginias property assess
ment in 1885 was s347, 767, 765, and the tax
for state purposes forty cents on the 500; but
it is evident that the real value is more than
twice the assessment. Moreover the tendency
in Virginia, as in many other places at pres
ent, is TO lay nearly all taxes on land; for of
the above total assessment only $S4, 81 ,O67
was on personals, and as there are at least
1000, 600 people in the state this would be less
than $50 per capita in personals, a self evil
dent abSurdity. Since the decision the state
has sought to protect itself in various ways
against n flood of coupons into the treasury;
but it is now believed Tor at any rate hoped
In Virginia. that when the new Justice is APP
pointed the supreme court of the United
States will be five to four the other way.
And this is indeed almost certain to be the
case. Such was the condition when Sir Ed
ward Thornton appealed to the state, and
such it remains; so there is much talk of an
appeal to the British government to do some
thing at Washington. Great Britain has en-
forced the rights of her ~bondholders in Peru,
Egypt and elsewhere, but that sort of a per-
formance would not do here. Negotiation
and discussion may induce the general gov
eminent to help Virginia, and then again,
and more likely, they may not.
]. B. PARKE.